Oct 26, 2016, 11:23 AM ETPanel

2016 CA Summit - Gains and Pains: The Cost of Providing Californians a Living Wage

California's minimum wage is scheduled to reach $15 per hour by 2023, with indexing starting in 2024.
Approximately 5.6 million workers will directly benefit from the state mandate, while an additional 800,000 have benefited from local increases, totaling 6.4 million affected individuals.
The average annual earnings increase for beneficiaries is projected at $3,700 per person, with indirect "wage push" effects benefiting those earning just above the threshold.
96% of the affected workforce are 20 years or older, and nearly half (47%) have at least some college education, challenging the stereotype of low-wage workers as exclusively high school students.
These workers constitute breadwinners, contributing an average of 50% to their family income.
The wage increase targets the bottom 30% of the wage distribution, addressing a historic trend where the bottom 50% of U.S. workers now receive only 10% of pre-tax income compared to 20% in the mid-1970s.

Russ Duvall (Milken Institute) argues a unified statewide wage is economically impractical due to cost-of-living disparities, noting that inland regions like Kern County have significantly lower median rents and prevailing wages.
Duvall anticipates "wage compression" against the lower middle class and increased substitution of labor with technology or more skilled workers.
Specific sectors at risk of competitive disadvantage include logistics, where companies might expand operations in Nevada or Arizona to avoid higher California labor costs.
The travel and tourism industry faces potential demand shifts as consumers may opt for lower-cost destinations if vacation costs rise.
Conversely, data from Los Angeles airport hotels (which adopted a $13 minimum wage in 2007) showed increased revenue per room and profits by 2009, even during a recession, with no employment decline.
Ken Jacobs (UC Berkeley) projects that the $15 increase will result in a negligible 0.6% rise in overall consumer prices in California, though restaurant prices may rise by approximately 5.1%.
Jacobs estimates that reduced worker turnover will absorb roughly 20% of the increased labor costs for businesses.
Jacobs concludes that positive economic effects (increased consumer spending) will likely balance out negative effects (higher prices), resulting in no measurable net change in overall state employment.

Panelists acknowledge that a $15 wage is insufficient to afford the average apartment in Los Angeles, where an estimated $33 per hour is required.
Roxana Tayan (LANE) emphasizes that wage increases must be paired with affordable housing strategies, citing a deficit of 80,000 units in Los Angeles and 500,000 in Southern California.
Measure JJJ and Proposition HHH are highlighted as legislative mechanisms to mandate affordable housing inclusion and fund homeless services.
Tayan notes that while luxury housing construction met 157% of requirements in 2013, only 37% of affordable housing requirements were met.
Regulatory inconsistency under CEQA is identified as a primary barrier to housing production, with approval timelines varying unpredictably between projects.

Russ Duvall advocates for Career Technical Education (CTE) as a superior long-term solution to inequality compared to minimum wage hikes, citing a 17% increase in metro GDP per capita for every additional year of post-secondary education.
Data indicates that 30% of future California job openings will require an associate degree or some college, yet CTE programs remain underfunded.
CTE graduates in technical fields can see median earnings rise to $66,000 within five years, compared to $38,000 for those with general education degrees.
Successful models include paid apprenticeships, such as the Los Angeles Department of Water and Power program for energy efficiency and solar installation, which addresses a graying workforce while providing certified skills.
Ken Jacobs cautions that education alone cannot solve the issue, as 30% of new jobs do not require additional education, necessitating wage floors and stronger labor bargaining power.
Rusty Hicks (L.A. Federation of Labor) highlights a successful program placing 20 of 30 previously incarcerated individuals into construction apprenticeships within the same year.

Panelists hope for federal action on the minimum wage, noting that several "red" states raised their wages in 2014 despite political opposition at the time.
Political candidates' stances remain divided, with Hillary Clinton supporting a $12 national floor and Donald Trump having previously supported $10.
Enforcement challenges are identified, particularly for smaller municipalities like Pasadena which may lack resources to police wage theft in sectors like restaurants.
Regional coordination, such as Santa Clara County's unified wage goal, is suggested to streamline enforcement and reduce costs for smaller cities.
The agricultural sector faces unique challenges regarding labor shortages and wage elasticity, with crop substitution expected for labor-intensive produce like strawberries versus highly automated crops like almonds.
The Governor signed the increase citing a "moral imperative" regarding 400,000 primarily immigrant farmworkers, separate from the economic debate.